Motor insurance
Insurance for cars, trucks, motorcycles and other road vehicles — also called vehicle insurance, car insurance or auto insurance.
In plain language
Motor insurance covers the vehicles people drive: cars, trucks, motorcycles and other road vehicles. The workbook lists it as one of the named insurance products in Chapter 6, alongside health, travel and property insurance.
It goes by several names in everyday use — vehicle insurance, car insurance, auto insurance — and the workbook treats all of these as the same product. Whichever name is used, the policy holder is protected against the cost of an event affecting the insured vehicle.
Like any insurance policy, the specifics — what is covered, for how much, and under what conditions — are set out in the policy document the insurer issues.
How it works
Motor insurance is one entry in the workbook's Chapter 6 table of insurance schemes, sitting between personal accidental cover and health insurance. The workbook does not break motor insurance into its own sub-types or give a premium range, a claim limit or an age condition for it in this booklet — the mechanics are covered only at the level of naming the product and its aliases.
What does apply is the general insurance framework from earlier in the same chapter: an insurer takes on the risk in exchange for a premium, and the insured receives a policy document naming the conditions under which a claim on the vehicle will be paid.
A worked example
Vikram insures his car with a motor insurance policy, paying an annual premium of Rs 8,000.
Six months later another vehicle damages his car in a parking lot, and the repair estimate comes to Rs 45,000. Because the damage falls within the conditions of his motor insurance policy, the insurer settles the repair bill instead of Vikram paying the full Rs 45,000 himself, for a premium that cost him a fraction of that amount.
Had Vikram driven without motor insurance, the entire repair cost — and the cost of any injury or damage to a third party — would have come out of his own pocket.
Why NISM asks about it
Chapter 6 (Insurance Related Products) lists motor insurance among the named insurance schemes, immediately after personal accidental cover policy. Expect a matching question pairing the product name with its one-line description and its common aliases.
Common exam traps
- Motor, vehicle, car and auto insurance are the same product in this workbook — do not treat them as different schemes.
- The workbook gives no premium figure, claim limit or specific coverage detail for motor insurance — any such number in a question is not sourced to this booklet.
- Motor insurance is a separate product from Personal accidental cover policy; one insures the vehicle, the other insures the person against accidental injury.
Check yourself
1.What does a personal accidental cover policy provide?
- a)Cover for medical and surgical expenses of any illness
- b)Monetary compensation in the event of bodily injuries, disability or death caused solely by accident
- c)Repair costs for a damaged vehicle
- d)Compensation for loss of luggage while travelling
Show the answer
Answer: (b) Monetary compensation in the event of bodily injuries, disability or death caused solely by accident
"Insurance plan which provides MONETARY COMPENSATION in the event of BODILY INJURIES OR DISABILITY OR DEATH CAUSED SOLELY BY ACCIDENT." Two words deserve attention. Disability — this is the only policy in the chapter that pays for a person being unable to work, as distinct from paying for treatment or for damage. And solely — the cause must be an accident. The wrong options belong to other products: (a) is health insurance, covering "the cost of an insured individual's medical and surgical expenses"; (c) is motor insurance, for "cars, trucks, motorcycles and other road vehicles"; (d) is travel insurance, covering "lost or stolen luggage" among other risks. For anyone whose income depends on physical capacity — a driver, a carpenter, a tailor — disability is often financially worse than death, because the household loses the income and gains a patient at once.
2.A self-employed carpenter is hospitalised after a fall and cannot work for five months. Which policies would respond to which parts of his loss?
- a)Health insurance alone covers everything
- b)Health insurance covers the medical and surgical expenses; personal accident cover responds to the disability and lost earning; motor insurance is irrelevant unless a vehicle was damaged
- c)Personal accident cover pays the hospital bills and health insurance pays his lost income
- d)Only a life insurance policy would respond
Show the answer
Answer: (b) Health insurance covers the medical and surgical expenses; personal accident cover responds to the disability and lost earning; motor insurance is irrelevant unless a vehicle was damaged
Three products, three different jobs, no overlap. Health insurance is "insurance coverage that covers the cost of an insured individual's MEDICAL AND SURGICAL EXPENSES" — the treatment. Personal accident cover provides "monetary compensation in the event of BODILY INJURIES OR DISABILITY OR DEATH CAUSED SOLELY BY ACCIDENT" — it is the only policy in the chapter that responds to a person being unable to work. Motor insurance is "insurance for cars, trucks, motorcycles and other road vehicles" — the vehicle, nothing more. Option (c) swaps the first two, which is the commonest confusion. For a self-employed person the five-month gap is the most dangerous part of the event: there is no employer, no paid sick leave and no group cover, so the household loses the income and gains a patient at the same time — which is why disability is often financially worse than death for anyone whose earning depends on physical capacity.
Where this is taught
Free preparation for NISM Series SEBI-ICERelated terms
- Insurance policyThe written contract an insurer gives a policy holder. It states the premium, the sum assured, and the conditions under which the insurer will pay a claim.
- Insured / policy holderThe person who buys an insurance policy, pays the premium, and receives the insurer's promise of compensation for a specified future loss.
- Personal accidental cover policyInsurance that pays monetary compensation for bodily injury, disability or death caused solely by an accident.
- Income protection needThe insurance need that arises when a sudden, unplanned bill would otherwise be met out of income — the category the workbook fills with health insurance and motor insurance.
- Third party motor insuranceThe compulsory part of motor insurance: cover for what the insured becomes legally liable to pay others for death, bodily injury or property damage — no motor vehicle may be used in a public place without it.